NEW YORK (CBSNewYork) – Global stock markets surged on Friday, boosted by a better-than-expected monthly jobs report from the United States, which showed the world’s largest economy concluded the second quarter with strong growth momentum, but U.S. bond prices dipped on investor concerns over the Federal Reserve’s response. Although the unemployment rate jumped to 5.9% from 5.8% the previous month, data revealed that job creation in the United States quickened in June, with nonfarm payrolls increasing by 850,000 jobs after expanding by 583,000 in May. Payrolls were expected to grow by 700,000 jobs, according to economists polled by Reuters.
The MSCI All Country World index gained 0.12%, and the pan-European STOXX index gained 0.24 percent, as the S&P 500 and Nasdaq reached new highs.
“This was a Goldilocks report for capital markets, equities, and bonds,” said Darrell Cronk, chief investment officer at Wells Fargo wealth and investment management. “This was ideal. There were enough jobs that you’d want to see, but not enough that people are worried that the Fed will have to intervene sooner than expected.” On a weaker dollar, gold rose as much as 1% earlier on Friday, closing near US$1,800, as investors weighed the possibility of Fed policy tightening in the wake of the jobs report. The Dow Jones Industrial Average gained 40.28 points, or 0.12%, the S&P 500 gained 13.56 points, or 0.31 percent, and the Nasdaq Composite climbed 40.36 points, or 0.28 percent, on Wall Street. The yield on a 10-year US government bond has dropped to 1.4407 percent. Investor concerns about the growth of COVID-19 cases outweighed the positive economic news from the United States, causing euro zone government bond yields to fall. The euro zone’s benchmark 10-year bond yield fell 3.5 basis points to -0.20 percent, its lowest level since mid-June.
On Friday, the dollar fell off a three-month high, pulled down by some of the weaker specifics of what was an otherwise good June nonfarm payrolls data in the United States.
Employment in the United States is still 6.8 million jobs lower than it was in February 2020. There are a total of 9.3 million job opportunities, which is a new high. The dollar index dropped 0.065%, while the euro slipped 0.13 percent to $1.1833. At 111.30 per dollar, the Japanese yen gained 0.19 percent against the US dollar. While equity markets are buoyed by the potential of a strong economic rebound, investors are concerned that a rapid recovery from the epidemic could boost inflation to an unfavorable level for the Fed.
Former US Treasury Secretary Lawrence Summers predicted that large US fiscal spending would trigger inflationary pressures unprecedented in a generation, while others say that talk of a return to 1970s-style inflation is just that until wage pressures return in force.
The price of spot gold increased by 0.4 percent to $1,782.81 per ounce. Gold futures in the United States rose 0.41 percent to $1,783.10 per ounce. Oil prices fell as OPEC+ ministers postponed a meeting on output policy, with sources claiming the United Arab Emirates had rejected suggestions to increase supply by 2 million barrels per day by the end of the year. Brent crude was recently trading at US$75.64 a barrel, down $0.20 or 0.26 percent. US crude was recently trading at $74.9 a barrel, down $0.33, or 0.44 percent. (Editing by Jonathan Oatis; reporting by Huw Jones in London and Elizabeth Dilts Marshall in New York.)/n
